Stick With Bitcoin, Avoid Ether, 10x Research Says After Fed Predicts Just One Rate Cut For 2024

10x said BTC is trending towards recovery following softer-than-expected CPI data.

The research firm added that the Fed will eventually signal further interest rate cuts.

ETF inflows resumed on Wednesday as US inflation came in lower than expected.

10x Research continues to defend Bitcoin even as the leading cryptocurrency trades under pressure following the Fed’s hawkish interest rate forecasts.

On Wednesday, the US central bank kept its benchmark borrowing cost unchanged at 5.25%-5.5%, as expected. However, only one interest rate cut was predicted out of three in March this year. Given the softer-than-expected CPI release earlier in the day, the Fed’s new rate forecast likely spooked markets and sent Bitcoin lower.

The leading cryptocurrency by market cap has fallen to $67,400 since the Fed released its rate forecasts, reversing the post-CPI jump to $70,000, according to CoinDesk data.

Still, 10x Research has a positive outlook on Bitcoin and expresses confidence that the rally will continue soon.

“Our advice remains unchanged: stick with the winners (Bitcoin) and avoid others (like Ethereum). Our previous analysis showed that a lower CPI number tends to push Bitcoin prices higher, and we predict this trend will continue,” Markus Thielen said. the 10x Research founder said in a note to clients on Thursday.

US consumer price inflation remained steady in May; It missed the consensus forecast for a 0.1% increase, down from 0.3% in April. The annual rate was 3.3%, in line with forecasts and down from 3.4% in April.

Bitcoin’s price trend tends to change direction based on US CPI figures. (10x)

The slowdown in inflation has historically attracted large inflows into U.S.-listed spot bitcoin exchange-traded funds, according to Thielen. Provisional data from Farside Investors shows ETFs raised $100 million on Wednesday, ending a two-day streak of outflows.

Thielen explained that ETF flows dried up after the first opening on January 11 due to the increase in December CPI, which weakened the possibility of a Fed rate cut. Flows resumed in February, pushing Bitcoin even higher.

“ETF flows turned positive at the end of January but began to accelerate only slightly ahead of CPI data due on February 13. However, when inflation rose again to 3.2% on March 12, Bitcoin ETF inflows stalled as the market priced in the following narrative” 2-3 rate cut,” Thielen said at the end of May.

Thielen expects the Fed to signal more rate cuts later this year, as inflation has already peaked.